Feb

14

There has been some comment on the timing of the so-called "smart money". Just how good are our betters at trading these exciting markets?

While we have no specific knowledge of who bought when, we have an algorithm that identifies when the average "smart money" goes from bullish to bearish, and vice-versa, while at the same time the amateur money is betting in the opposite direction. This link will give you its recent history.

This is a sentiment indicator and it has its theoretical roots in the Efficient Market Hypothesis. It plots the best fit over successive N days, where N varies from very short term to say more than a year. The best of the best fits are the smarties, and the worst of the best fits are the amateurs. The smarts are attentive and the amateurs tend to be complacent. This model is not perfect but it tells some interesting tales. At the most recent peak, the smart money turned bearish as of the close on January 30th. They have not yet turned bullish as of February 12th.